Identifying Key Success Factors in the Airline Industry in the Post-COVID World

Identifying Key Success Factors in the Airline Industry in the Post-COVID World: Overcoming Old and New Challenges in the UAE Airline Industry
A Dissertation submitted to ____________________in partial fulfillment of the requirements for the degree of Master of Business Administration in Aviation Management
2022

School of Aviation Studies and Business Management
Table of Contents
Introduction. 4
Statement of the Problem.. 6
Objectives. 6
Research Questions. 6
Research Hypotheses. 6
Research Model 7
Significance of the Research. 7
Assumptions. 8
Limitations. 8
Definition of Terms. 9
Literature Review.. 10
The Impact of The Pandemic on Consumer Perceptions. 10
Impacts of the Pandemic on Airline Travel 12
Measures Taken During the Pandemic. 14
Post-Pandemic Innovations and Shifts. 17
Methodology and Research Design. 20
Data Collection. 21
Advantages of Primary Method of Data Collection. 22
Challenges of Primary Method of Data Collection. 23
Advantages of Secondary Method of Data Collection. 23
Challenges of Secondary Method of Data Collection. 23
Data Analysis and Findings. 25
Survey Analysis. 25
Findings. 36
References. 43
Appendix. 46
Abstract
This study seeks to outline the core success factors that will drive the aviation industry forward in the post-pandemic world, specifically by considering how this worldwide crisis has changed consumer perception towards air travel. By considering core changes and shifts within the industry during the pandemic, the study focuses on understanding how aviation firms' future growth and development tactics could be reshaped from the focal point of safety, individual responsibility, and environmental sustainability. The use of primary closed and open-ended survey questions allowed for assessing consumer perception associated with the pandemic and air travel during this time. The study finds that increased focus on technological innovation on passenger safety and a commitment to environmental sustainability could be key game-changers in gaining a competitive advantage in the post-pandemic world.
Keywords: Aviation, air travel, airline industry, pandemic, Covid-19, business, shifts
Introduction
According to Keynes (2009), the airline industry, as opposed to most other sectors, is subject to rapid paradigm shifts, aided in part by the digitalization of modern airline services. As customer demands and expectations continue to expand, and regulatory frameworks associated with government action and organizational dynamics continue to shift, the aviation industry becomes ever-increasingly complex. The inability to adapt to the changes in the industry can result in bankruptcy and dissolution of entire companies, which is an aspect that has been observed over the years several times. The UAE is no stranger to the "change to survive" phenomenon. This situation has merely been exacerbated due to the COVID-19 pandemic, during which, according to Benny (2021), airlines in the UAE and Middle Eastern regions suffered losses upwards of $7.1 billion.
In the aftermath of the COVID-19 pandemic, a reconciliation of the core success factors in the airline industry is a crucial necessity to ensure that further bankruptcy cases and potential loss of organizational capabilities are reduced. In place of this, the paper at hand considers the various challenges that airline companies face within the context of the pandemic as well as the overarching industrial dynamics that make survival so complex and challenging in the sector. By focusing on specific airline companies in the UAE, such as Emirates and Etihad, along with their international counterparts, the paper seeks to find the answer to what enables survival in this industry possible while also recognizing the intrinsic aspects that pose the fundamental challenge to the consistent growth in the face of a worldwide crisis. Some of the critical areas of focus include the potential to adapt to sweeping changes or innovation by suppliers, marketing-oriented reputation risks, customer influence on survivability, competitive dynamics and their impacts, as well as the influence of economic and resource constraints. Essentially, in the context of a post-COVID-19 world, the paper seeks to outline the necessary steps that airline companies need to take to ensure continued proliferation in an increasingly uncertain world. 
According to the study conducted by (Bose, 2018) aviation industry is quite competitive. Different airlines are offering similar types of packages and services to clients. It has made it tough to gain a competitive edge in the market. Companies are trying their best to come up with unique and creative ideas to formulate a strong customer base. Without it, it would not be possible to fulfill any business objective. The aviation firms are also trying to arrange training sessions for the staff members. It helps them stay up to date about the latest market trends and eventually leads to the successful achievement of the business objectives.
Dube et al. (2021) highlighted in a study that the global pandemic of COVID 19 has left devastating impacts on the aviation industry. Companies are now forced to limit their flying operations and are restricted to keep competitive standard operating procedures and customer safety. The economic growth rate followed by any region and the trends in the aviation industry is two closely related factors. If the economy of any region is not doing well, it becomes difficult for large firms like airlines to compete effectively. The economic growth rate followed by even most developed areas worldwide has been negatively affected during the pandemic. This is the reason that the aviation industry is suffering from challenges. Moreover, small-scale companies are looking for their survival options and have failed to meet all set targets for the coming years.
Alsyouf et al. (2018) explained that organizations face various challenges in the aviation field. The most challenging factor is changing fuel prices. The drastic changes in the fuel rates could be why firms fail to meet their respective targets. Different airlines in the past have eventually moved towards shutting down their operations just because of fluctuations made in fuel prices. Without getting aircraft fuel at the correct rate, the airlines can't meet the targets of getting sustained competitive advantage. Some firms like Delta airlines have also established their own refineries that help companies avoid the negative impacts of changing fuel rates on the business operations and procedures. The proper management decisions are the key to solving the majority of the issues airlines face.
Alameeri et al. (2017) highlighted that gaining customer satisfaction is also quite challenging for the airlines, and if any company fails to meet the customer targets and standards, then they will opt for another airline in the future. Customer satisfaction and a strong customer base can be achieved with the help of keeping in view the comfort level offered to the passengers during onboard and off-board operations. The competitive edge can be obtained if crew members are regularly trained regarding critical principles and procedures that must be followed by them during flying operations. This would leave long-lasting impacts on the overall business growth and profitability.
In the times of the COVID-19 pandemic, airlines worldwide, including the UAE aviation market, which is the core focus of the study, have been able to approach these issues of consumer satisfaction and competitive advantage in a whole new manner. As new necessities were born and complete renovation of old ways of working was warranted, several new opportunities arose that allowed airlines to compete with each other in more ways than before and under radically new playing fields.
Statement of the Problem
The core focus of the study is to understand how the critical success factors of the aviation industry in the UAE have shifted during the COVID-19 pandemic, allowing for whole new possibilities with regards to improving market share, brand reputation, and consumer retention as a whole into the future. In essence, the problem statement is to outline the new success factors in the post-COVID world and the challenges that gave rise to these during the pandemic crisis, and the pressures that it laid upon the aviation industry of UAE as a whole.
Objectives
The objectives of this project are as follows:

1. 
   To highlight various challenges faced by airlines within and outside the UAE aviation industry during the COVID-19 pandemic
   


2. 
   To identify the emerging key success factors for the firms operating in the aviation industry of UAE in the post-COVID world
   

Research Questions
The key questions that will be answered with the help of this project are following:

1. 
   What are the critical success factors of the firms operating in the aviation industry of UAE in the post-COVID world?
   


2. 
   What are different challenges that organizations in the UAE aviation field face due to the pandemic?
   


3. 
   How has consumer perception changed towards the UAE aviation market due to the pandemic?
   


4. 
   What competitive strategies can organizations adopt to overcome competitive challenges in the coming years?
   

Research Hypotheses
The following hypotheses drive the study at hand:
H1 – The post-COVID era will see consumer perception shifts that will give rise to success factors for aviation companies that are vastly different from those that existed before the pandemic
H2 – The pandemic offers the chance for airlines to gain a competitive advantage via numerous approaches and in various domains that were born as a direct result of these consumer perceptual shifts
Research Model
The core philosophy, belief system, or value framework that the research will be based on allows the researcher to approach the core subject topic from scientific inquiry or societal change. On the one hand, the positivist research philosophy is based on a scientific examination, focusing on verifiable research data to obtain objective results that either prove or disprove an established hypothesis. This is an approach that best fits within the model of the scientific method. On the other hand, the interpretivism research philosophy does not merely focus on objective reality because it is impossible to separate the individual from the subject topic or "reality" that is being researched.
Hence, instead of merely focusing on concrete objective outcomes using verifiable research data, the interpretive philosophy focuses on utilizing the subjective life experiences and perceptions of individuals involved in the reality being researched. In the case of the present paper, the interpretive approach will be taken towards analyzing the core challenges and success factors precisely because the perspectives, perceptions, and experiences of employees and customers within the industry will be the core sources of interpretation. The methodology utilized for the same will include both primary and secondary techniques, including questionnaires and data collection via already published sources. Data will be collected from reliable sources. It is planned that questionnaires will be arranged to gather data and to identify the challenges faced by the aviation industry clearly. The reliability of the data collection sources will be ensured, and the results of the questionnaires will be carefully analyzed.
Significance of the Research
The study will help highlight different practices and strategies that aviation companies can follow in UAE to ensure future success, specifically within the post COVID world. The ways of gaining a competitive edge in aviation will be highlighted with the help of this study, thereby positioning it as a source of offering future strategic directions to aviation firms.
This study will act as a source of offering directions and future success targets to the aviation organizations that have the task of surviving in a world where consumer perceptions, aspirations, and expectations are considerably different than what they were before environment concerns, personal safety, and individual responsibility were aspects of problems and importance. It will also help cover gaps present in the literature and might lead to a better success rate of the firms in the aviation field in coming years.
Assumptions
The study is based on the assumption that the pandemic will continue for a substantial period and will continue to exert pressure on the mindset and perceptions of travelers if not on the actual systems associated with aviation and air travel. Moreover, the study also assumes that many of these consumer perceptions will be taken into consideration over time by aviation firms and airline companies as a way for planning future endeavors, which in turn are assumed will be required on a consistent and constant basis. The latter assumption is based on the prediction that the pandemic is a series of unfolding planet-wide scenarios that will continue to impact industrial frameworks to more or less a level of influence.
Limitations
One of the core limitations of the current study is that a significant part of its findings is based upon the experiences of individuals who have frequented mainly two airlines in the nation, Emirates and Etihad Airlines. The same applies to the literature review, which is primarily based on the functions, operational advancements, shifts, and innovations that occurred through these two airlines. This is because, in the UAE, these two airlines occupy a majority of the overall market size in terms of value and reputation. Moreover, these are also the national carriers of the nation and hence, represent the aviation industry in the best possible manner as a direct emanation of regional perspectives towards travel, tourism, and hospitality. This is, however, a limitation as the reduction of airlines and aviation firms to merely two can, in turn, lead to an inevitable condensing of findings into subjective contexts that may not apply to the global aviation industry as a whole.
Definition of Terms
Post-COVID era/Post-pandemic world: this is used to signify the "new normal" within the context of the aviation industry, specifically concerning the changing technologies, methodologies, and the underlying institutional perspectives towards these that will be prevalent after the pandemic subsides. Some of the core facets of this world include an increased emphasis on environmental sustainability within the context of organizational functions and an increased focus on consumer safety and security.
Consumer Perceptions: this is an umbrella term that defines the fundamental mindset of the consumer or passenger who opts for air travel, inclusive of their belief system, their interests, opinions, and understanding of the reality around this form of public transport. Perceptual dynamics of consumers within this study would involve considerations of individual responsibility, openness to risk-taking, fear and insecurity associated with precautionary measures, cynicism towards institutions, and other aspects that contribute directly or indirectly to decision-making regarding air travel.
Critical Success Factors: in the context of the current study, critical success factors are those parameters that will allow airlines to improve their functioning and thrive in a world where perceptual, as well as core environmental factors around the organization are entirely different from those that were established before the pandemic arrived
Competitive Edge: the contextual explanation of competitive edge is essentially the ability to outsmart the competition within the aviation industry on an international level by focusing on innovations and new developments which exploit the new perceptual dynamics of the new normal to guide consumer decision-making and choice of airline carrier and company 
 
Literature Review 
The Impact of The Pandemic on Consumer Perceptions
Several authors have studied the impacts of the pandemic on tourism and mobility in general since the beginning of the lockdowns that were initiated across the globe. Numerous such studies have used data from the peak of the lockdown period to postulate and predict the future of travel and tourism in a post-COVID 19 world. Many of these predictions are based on the considerable level of decline noted among passengers across the globe regarding opting for public transportation mediums, coupled with an increasing intent to travel by private car. In a study conducted by Li, Nguyen, & Coca-Stefaniak (2020), many respondents were intent on putting off any traveling plans, both in terms of business and leisure, for after six months or more succeeding the official declaration of the end of the pandemic. These respondents also expressed their desire to reduce the amount of time spent on vacations after the pandemic, focusing on short-time intervals rather than long-drawn vacations.
The perceptions of respondents during the pandemic were found to be closely interlinked with post-pandemic perceptions of travel. This aspect clearly allowed the aforementioned authors to delineate two types of individuals among the respondent group. One of these was the crisis-sensitive tourists and the other crisis-resistant tourists. On the one hand, the crisis-sensitive tourists were more prone to have their long-term perceptions impacted due to the pandemic and preferred to remain averse to travel plans in the aftermath of the crisis. On the other hand, crisis-resistant tourists were open to travel immediately or soon after the pandemic was under control. These individuals were classified by several parameters, including being older, having little or no dependents associated with their living conditions, and also having a well-educated background. Studies conducted before also point to the interlinking relationship between educational level and income levels on one hand and perception and willingness to travel after a crisis (Gokovali, Bahar, & Kozak, 2007). However, the scale of the current situation and its global nature, coupled with the extended coverage and perceptual outlook afforded by the media towards its consumers during a problem like the COVID-19 pandemic, are unprecedented and remain to be contextually studied within the present day scenario. Numerous studies have outlined similar situations and strived to extract relevant findings of traveler perceptions during and after the crisis, but have come up with results that often contradict the more recent studies, thereby showing the true uniqueness of the current situation as opposed to others that have been studied before, such as the Ebola pandemic and its impact on tourism studied by (Novelli, Burgess, Jones, & Ritchie, 2018).
A study conducted by Toanoglou, Chemli, & Valeri (2021) has considered the impact of the pandemic on travel perceptions by including several more peripheral factors, such as cross-cultural differences in perceptions and the impact of media content. One of the core findings of the study was that perceptions towards travel during and after a crisis, which was mainly relegated to aspects such as income level and educational level as outlined above, were also found to be majorly linked to and impacted by the geographical location from where the respondent was from. Media coverage was found to be linked with a positive impact as far as awareness and perceived risk towards travel during and after the pandemic was concerned. Another major finding was that individuals who were actively involved in travel under normal everyday circumstances and/or were directly linked to the tourism industry as a result of their work commitments or job roles perceived higher risk towards travel in the aftermath and during the pandemic. This comes from their increased awareness of the problem through hands-on practical experiences surrounding their interaction with the infrastructure and facilities involved in travel. Inter-geographic elements, such as the relationships between two countries and the overall degree of trust and confidence in a specific country's governmental decision-making apparatus, also played a fundamental role in determining the degree of risk perceived by the respondents regarding destination-based travel plans. Lastly, the study found that the degree of transparency and level of explicitness of information shared by the government of a country with regards to the pandemic also influenced the degree of perceived risk towards travel amongst respondents within that country.
According to a survey conducted by IATA (2020) on consumer perceptions towards airline travel immediately after the pandemic's major impact was felt on the everyday lives of passengers, it was observed that some of their main concerns before boarding include using restroom or lavatory facilities at the airport (38%), standing in the queue with people during the security check and boarding process (42%) and sitting in a crowded public transport system (bus or train) on the way to the airport or the aircraft (59%). The perceived threats on the part of passengers while on board the aircraft included breathing the air on the plane which might be infected with the virus (37%), using lavatory or restroom facilities on board the flight (42%), and sitting next to a fellow passenger who might be a carrier of the virus (65%).
Impacts of the Pandemic on Airline Travel
When it comes to the airline industry, the impacts of the pandemic have been multifold, to say the least, owing to the way in which the global scale of the crisis disrupted the cross-border nature of this mode of public transport. According to Suau-Sanchez, Voltes-Dorta, & Cuguero-Escofet (2020), about 98% of the global passenger revenues were attributed to airline travel as of 24^th of March, 2020, indicating the sheer dependence associated with this mode of travel in the international tourism arena. The authors also found that this 98% was also associated with transport markets that eventually imposed the most severe restrictions with regards to air travel in the aftermath of the pandemic, including partial travel bans, compulsory quarantine on arrival, border closures, and other such measures. Even though the consumer side of the pandemic has been explored to a reasonable extent, authors such as Suau-Sanchez, Voltes-Dorta, & Cuguero-Escofet (2020) have also examined the perceptions of employees within the airline industry with regards to the short term and long-term impacts of the pandemic.
As per the interviews conducted among airline personnel at various organizational tiers, it was found that one of the main concerns in the aftermath of the pandemic was associated with competitiveness and the assurance of maintaining a level playing field, specifically after major government aid to several airline companies. State aid and its impact on the airline industry was a core aspect of the narrative among personnel within this sector, all of whom approached the issue from various angles, including the potential for government funding to aid competitors who would not have survived even outside the context of the pandemic, the potential for the state to become stakeholders in private airline companies and drive decision-making, and the vast differences in state-aid across countries owing to the lack of a holistic overarching policy framework (Macilree & Duval, 2020).
Another crucial parameter that showcases the sheer scale of impact pertaining to the pandemic on the aviation industry is the shift in the ranking of China in the aviation industry as far as the market size and capital were concerned. Merely four weeks after the outbreak began, namely in January 2020, the Chinese aviation market had fallen from being the third-largest in scale and market size to the 25^th, placing it just slightly ahead of Vietnam in the global rankings. This is the cumulative result of a fall of over 74.6% in airline traffic within the Chinese market as of January 2020, due in large part to the impact of the pandemic on airline routes to Japan, which is one of the core destinations for Chinese travelers. Several other markets also registered major losses in airline traffic immediately after the pandemic outbreak was broadcasted and made official, with the United States using 86% of its traffic over the first four weeks of the outbreak and regions like Indonesia suffering even larger losses, approximating up to 96% decrease in passenger footfalls in the same period (Mhalla, 2020).
When comparing the observations put forth by Siu and Wong (2004) during the SARS outbreak and its impact on aviation with the COVID-19 pandemic, it becomes clear that the losses are much more debilitating this time around, specifically due to the immense proliferation of Chinese airline routes across the globe since that time. Being the epicenter of the COVID-19 pandemic, impacts on the Chinese aviation industry rippled throughout the globe and influenced the airline traffic to several other countries, and shaped the travel policies that further determined crucial routes later on during staggered reopening. Over 50 airlines across the world reduced their flights plying to and from China, while about 70 airlines suspended all international flights to the country due to the risk factors associated with the outbreak.
Another crucial aspect of the impact of the pandemic on international aviation is defined by how airline companies reacted during this period of pressure to manage losses and ensure sustenance of operations. The German airline, Lufthansa, announced the freezing of all hiring ventures and also instated numerous administrative level programs designed to cut spending. This involved halting recruitment activities for over 4,500 group-level positions yearly, out of which 3000 were in Germany alone. One of the core changes initiated by the airline also involved cutting of several flights to and from Asia. The airline also offered the opportunity for existing employees to take unpaid leaves for as long as they required and also expanded their employment scope to part-time positions in lieu of the reductions initiated in the volume of projects (by 10%) and material expenses (20%) (Albers & Rundshagen, 2020).
At the beginning of 2020, Air France-KLM estimated that the financial losses that would result from canceling flights to and from China for the airline would be anywhere between 150 to 200 million euros, specifically as a result of the falling demand that was characteristic of the early stages of the pandemic as a result of shifting consumer perc...